PRESENTED BY :- CA ASHISH KUMAR AGRAWAL 9308016622 ... › images › docs › ... · CA ASHISH...

PRESENTED BY :-CA ASHISH KUMAR AGRAWAL

9308016622caashishagrawal.in@gmail.com

why govt. charges taxü Govt. of India provides many kind of services to its resident

people or to the non-residents such as infrastructure facility,security etc. and moreover a place where people can earn andlive.

ü In providing these facilities govt. incurs a huge amount ofexpenditure and to meet those expenditures, Govt. needs fundsand there is no specific source from which govt. can generaterevenue.

ü Therefore, we can say tax is a fees charged by the govt. againstthe services provided.

ü Govt. major source of revenue is tax (Direct tax and Indirecttax).

DIRECT AND INDIRECT TAXES� Direct Taxes: A tax which is born and paid directly by

the person on whom it is impose is a direct tax e.g.,Income Tax. It is directly paid by the tax payer to thegovernment without any intermediary and it comesfrom own pocket.

� Indirect Taxes: If a tax is passed on by the tax payer tosome other person, it is indirect tax e.g. Goods andService Tax (GST). It is not directly paid by the personon whom it is levied, but is paid indirectly through themedium of other persons.

HISTORY OF INCOME TAXü At present, Income Tax Act 1961 is in force in India.

ü The present Income tax act was enacted in 1961, which came intoforce on 1st April 1962.

ü In 1956, the government referred the Income Tax Act to the Lawcommission which submitted its report in 1958. Direct TaxesAdministration Enquiry Commission was appointed in 1958under the Chairmanship of Shri Mahavir Tyagi.

ü On the basis of recommendations of both these bodies thepresent IT Act was enacted.

ü This Act of 1961 has since been amended number of times.

Source to Read Income Tax Law inIndia

Income TaxAct 1961 Income Tax

Rules 1962

AnnualFinance Act CBDT

Circulars &Notification

JudicialDecisions

BASIC TERMS OF INCOME TAX� Assessee: is any person who is required to pay Income tax

or any other sum payable under the Income Tax Act beinginterest, penalty etc.

� Assessment Year: is the period comprising of twelvemonths starting on 1st of April & ending on 31st March ofthe next year. Assessment year succeeds the financial year.For eg. For the FY 2018-2019, the AY will be 2019-2020.

� Previous Year: is the financial year preceding theassessment year. It is also known as the accounting year orincome year.

� Persons Liable to Pay Income Tax: are the persons liable topay income tax if there income levels exceeds the minimum sumthat is exempt from tax:

� Individuals (including non-residents)� Hindu Undivided Families – consists of all persons lineally

descended from a common ancestor including their wives &unmarried daughters. An HUF is a creation of law. It is a separateentity than can own or sell property, enter contracts or earnincome.

� Association of Persons – is an arrangement where two or morepersons have voluntarily joined together for a common purposewith the object of producing income, profits & gains.

� Body of Individuals – conglomerate of persons who have cometogether not voluntarily, but carry on some activity to earnincome.

� Artificial Juridical Persons� Societies & Trusts

� Following are required to pay income tax irrespectiveof their income levels:

� Partnership Firms & Limited LiabilityPartnership: is an arrangement, where people haveagreed to share profits of a business, carried on by allor any of them acting for all.

� Co-operative Societies: is a group of individuals whohave come together for their mutual benefit.

� Companies: can be Indian/ domestic (public – inwhich public have a substantial interest or private –where public do not have a substantial interest) or aforeign company.

� Local Authorities: – include Panchayats, LocalMunicipality.

� Income: refers to earning by the deployment ofasset or by rendering any service. Revenue receiptscome under this category, which keep accruingfrom time to time.

� The term income is of great significance withrespect to income tax.

� For the liability of tax is computed on this“Income”.

� There are five broad heads under which incomehas been classified.

� Capital Receipts: are different from revenue receipts.Capital receipts are generally exempt from tax unlessexpressly stated.

� Clubbing of Income: would in simple words, meansumming up of the Income prone person with the incomeof another person. The most common cases the clubbing ofminor child’s income with that of his either parent.

� Deductions: after calculating the total income from thevarious heads of income, certain amount is deductedtowards expenditure incurred to earn that income e.g. lifeinsurance premium paid, investment in tax saving schemes& mutual funds. These deductions help in saving a certainamount of tax. They are also called the 80 series deductionsas they are contained in sections 80A to 80U.

� Set Off & Carry Forward: set off is the adjustment ofcertain losses against income from the various sources ofincome.Carry forward is the carrying forward of certain losses to beadjusted (set off) in subsequent years.

� Gross Total Income: is the sum of all the earnings fromthe various heads of income, after set off of any loss thatwas carried forward from the past years.

� Taxable Income /Net Income: is the gross total incomeless the deductions. It is on this sum that the tax liability iscalculated.

� Permanent Account Number: is a unique ten digit alpha-numeric number, on the basis of which the Income taxdepartment identifies the assessee.

� Income Tax Return: after the assessee hascalculated his tax liability (self assessment), he isrequired to file his return of income in theprescribed time & manner.Due dates of filing returns are:

� Companies - 30th September� Assesses whose accounts are required to be

audited under IT Act – 30th September� A working partner of the firm, whose accounts are

required to be audited – 30th September� All other assesses – 31st July.

HEADS OF INCOME� Income from Salary: includes income from wages,

annuity, pension, gratuity, fee, commission, advance salaryetc. For income under the head salary, the existence ofemployer-employee relationship is a must. It is chargeableon due or paid basis, whichever is earlier.

� Income from House Property: house property is anybuilding or land appurtenant thereto (courtyard/compound), of which the person is the owner.

� Profits & Gains of Business / Profession: the termBusiness includes any trade, commerce or manufacture.Profession means any vocation, occupation requiringintellectual or manual skill.

� Income from Capital Gains: is any profit or gainarising from the transfer of capital assets duringthe previous year.

� Income from Other Sources: This is the residueshead of income. Income that does not fall underany of the above heads of income, are taxed underthis head.

RATES OF INCOME TAX[A.Y. 2019-20]

I Individual (other than a resident individual of the age of 60years or more)[The same rates are also applicable for HUF/AOPs/BOIs/Artiftcial Juridical Person]

Total Income (TI) Income-taxpayable

≤ Rs 2,50,000 Nil> Rs 2,50,000 but ≤ Rs5,00,000

5% of the amount by which the total incomeexceeds Rs 2,50,000

> Rs 5,00,000 but ≤ Rs10,00,000

Rs 12,500 plus 20% of the amount by whichthe total income exceeds Rs 5,00,000

> Rs 10,00,000 Rs 1,12,500 plus 30% of the amount bywhich the total income exceeds Rs 10,00,000

II Resident individual of the age of 60 years or more but lessthan 80 years at any time during the previous year 2018-19

Total Income (TI) Income-taxpayable

≤ Rs 3,00,000 Nil

> Rs 3,00,000 but ≤ Rs5,00,000

5% of the amount by which the total incomeexceeds Rs 3,00,000

> Rs 5,00,000 but ≤ Rs10,00,000

Rs 10,000 plus 20% of the amount by whichthe total income exceeds Rs 5,00,000

> Rs 10,00,000 Rs 1,10,000 plus 30% of the amount bywhich the total income exceeds Rs 10,00,000

III Resident individual of the age of 80 years or more at any timeduring the previous year 2018-19

Total Income (TI) Income-taxpayable

≤ Rs 5,00,000 Nil

> Rs 5,00,000 but ≤ Rs10,00,000

20% of the amount by which the total incomeexceeds Rs 5,00,000

> Rs 10,00,000 Rs 1,00,000 plus 30% of the amount bywhich the total income exceeds Rs 10,00,000

Rebate under section 87A in case of an individual resident in India:Lower of tax payable or Rs 2,500, where total income does not exceedRs 3,50,000.

Assessee Income-Tax Rate

Firm/LLP 30%

Domestic Company having totalturnover/ gross receipts in P.Y. 2016-17 <Rs 250 Crore

25%

Other Domestic Companies 30%

Foreign Company engaged in specifiedroyalties and fees for technical servicesfrom govt.

50%

Other Foreign Companies 40%

RATE OF SURCHARGE A.Y. 2019-20Assessee Total Income Level Rate of SurchargeIndividual/HUF/AOPs/BOIs/ ArtificialJuridical Person

< Rs 50 Lakh Nil

> Rs 50 Lakh but < Rs 1 Crore 10%

> Rs 1 Crore 15%

Co-operativeSociety/ LocalAuthority/ Firm/LLP

< Rs 1 Crore Nil

> Rs 1 Crore 12%

Domestic Company < Rs 1 Crore Nil

> Rs 1 Crore but < Rs 10 Crore 7%

> Rs 10 Crore 12%

Foreign Company < Rs 1 Crore Nil

> Rs 1 Crore but < Rs 10 Crore 2%

> Rs 10 Crore 5%Note: Income tax has to be computed on Total Income. Surcharge iscomputed on such income tax. Health and education cess @ 4% has to becomputed on income tax plus surcharge, if applicable.

A. Heads of Income1.) Income from Salary XXX2.) Income from House Property XXX3.) Income from Business/Profession XXX4.) Income from Capital Gains XXX5.) Income from Other Sources XXXB. GROSS TOTAL INCOME (Sec. 14) XXXLess: Deductions u/s chap-VI-A (Sec.80C to 80U) (XXX)D. TOTAL INCOME [Sec.2(45)] XXXE.Tax Due (As Per Slab) XXXLess: Rebates and Reliefs u/Chap-VIII (XXX)F. Tax Payable XXX

COMPUTATION OF TOTAL INCOME

Definition of E-Filing� e - Filing is a system for submitting tax documents to

the Income tax department through the internet ordirect connection, usually without the need tosubmit any paper documents. E - File is the term forelectronic filing, or sending your ITR from taxsoftware via the Internet to the tax authority”.

Requirements for filling of ITR Online

1. Income2. PAN3. Bank Account Details

Go towww.incometaxindiaefilling.gov.in

Home page of SiteClick on Register Yourself (at Right hand side)

This is Registration FormSelect User Type as Individual

Fill the details

� After filling details click on continue tab.� Now a screen appears, fill the requisite information as

demanded by the income tax department e.g.Password, Two Security Questions, Mobile Number, E-mail ID, Address etc.

� After filing details click on continue tab.� Now a new screen appears demanding the One Time

Password which comes in Mobile phone and Email Id,fill the same in the respective columns.

� Click on continue button and get registered.

ITR FORMS IN A.Y. 2019-20� ITR 1: For Individual, HUF (Residents)� ITR2: For Individual, HUF� ITR3: For Individual, HUF, Partner in a Firm� ITR4: For Individual, HUF, Firm� ITR5: For Partnership Firm, LLP� ITR6: For Company� ITR7: For Trust

ITR-1 Applicability� Salary or Pension Income� Income from one house property (excluding cases

where the loss is brought forward from previous years)� Agricultural income which is less than Rs 5,000� Income from other sources like FD/Shares/NSC etc.� No income from lottery or horse racing.� ITR Form-1 (Sahaj) can be filed by an individual/HUF

who is resident other than not ordinarily resident,having income up to Rs 50 lakh and who is receivingincome from salary, one house property / other income(interest, etc.).

Who cannot use ITR 1 Form?� Total income exceeding Rs 50 lakh.� Agricultural income exceeding Rs 5000.� If you have taxable capital gains.� If you have income from business or profession.� Having income from more than one house property.� If you are a Director in a company.� If you have had investments in unlisted equity shares at any time

during the financial year.� Owning assets (including financial interest in any entity) outside

India) if you are a resident, including signing authority in any accountlocated outside India.

� If you are a resident not ordinarily resident (RNOR) and non-resident� Having foreign assets or foreign income.� If you are assessable in respect of income of another person in respect

of which tax is deducted in the hands of the other person.

Recent Changes in ITR-1

� ITR 1 form for FY 2018-19 is not applicable to an individualwho is either a director of a company or has invested inunlisted equity shares.

� Under Part A, ‘Pensioners’ checkbox has been introducedunder the ‘Nature of employment’ section.

� Return filed under section has been segregated betweennormal filing and filed in response to notices.

� There shall be a separate column for standard deductionupto Rs.40000/- for salaried individuals.

� Deductions under salary will be bifurcated into standarddeduction, entertainment allowance and professional tax.

� Income from other sources shall be bifurcated in detailedmanner. For example- If assessee has earned interestincome then it has to be bifurcated into details like interestfrom saving bank account or post office or FDs orunsecured loans etc.

� New section inserted for senior citizens – Sec 80TTB –which allows senior citizen to get deduction from interestincome upto Rs. 50000/-.

� Assessee has to furnish details of exempt income likeHRA.

� A separate column is introduced under ‘Income from othersources’ for deduction u/s 57(iia) – in case of familypension income.

� ‘Deemed to be let out property’ option now available under‘Income from house property’.

e-filing of ITR of Salaried Person

Source of InformationF Form No 16F Salary CertificateF Salary Slip etc.

Presumptive Income & itsTaxation – under section 44AD

� If gross receipts are received through a digital mode ofpayment, then Net Income is estimated at 6% of such grossreceipts and for cash receipts. However, the rate is the sameat 8% of such cash receipts.

� You don’t have to maintain books of accounts of thisbusiness.

� You have to pay 100% Advance Tax by 15th March for such abusiness. No need to comply with the requirement ofquarterly installments due dates (June, sep, Dec) ofadvance tax.

� You are not allowed to deduct any business expensesagainst the income.

Eligibility Criteria for this Scheme� Your gross receipts or turnover of the business for

which you want to avail this scheme should be lessthan Rs 2 crore.

� You must be a Resident in India.� This scheme is allowed to an individual, a HUF or a

partnership firm. It is not available to a Company.� The scheme cannot be adopted by the taxpayer, if he

has claimed deduction under section 10, 10A, 10B,Section 10BA, or Section 80HH to 80RRB in therelevant year.

Eligible Businesses� The taxpayer may be in any business – retail trading or wholesale

trading or civil construction or any other business to avail thisscheme.

� But this method of income computation is NOT applicable to:� a. Income from commission or brokerage� b. Agency business� c. Business of plying, hiring or leasing goods carriage (see section

44AE)� d. Professionals – who are carrying on a profession of legal,

medical, engineering, architectural, accountancy, technicalconsultancy, interior decoration, an authorized representative,film artist, company secretary and information technology.

Presumptive taxation underSection 44ADA

� The benefit of Presumptive tax rates was only available tobusinesses. But now this benefit has been extended toprofessionals also. It will be applicable to the professionals,whose total gross receipts does not exceed Rs 50 lakhs ina financial year.

� Presumptive Tax Rate: The income of the professionalsopting for this scheme would be assumed at 50% of thetotal gross receipts for the year.

� No requirement of Maintenance of books ofAccount: Professionals opting for this scheme need notmaintain books of account required under section 44AA.They also need not get the books of account get auditedunder section 44AB.

Applicability of the scheme� The persons engaged in the following profession can opt

for this presumptive Income scheme:� a. Medical� b. Engineering� c. Legal� d. Architectural Profession� e. Accountancy Profession� f. Technical Consultancy� g. Interior Decoration� The scheme is applicable only to a resident assessee, who is

an individual, HUF or Partnership and not LLP (LimitedLiability Partnership Firm).

Who is required to file ITR 4?� ITR 4 is to be filed by the individuals/HUF/ partnership

firm whose total income of AY 2019-20 includes :� a. Business income under section 44AD or 44AE� b. Income from profession calculated under section 44ADA� c. Salary/pension having income up to Rs 50 lakh� d. Income from One House Property having income up to

Rs 50 lakh (excluding the brought forward loss or loss to becarried forward cases under this head);

� e. Income from Other Sources having income up to Rs 50lakh (Excluding winning from lottery and income fromhorse races).

Who is not required to file ITR 4for AY 2019-20?� An individual having income from salary, house

property or other sources above Rs 50 lakh cannot usethis form.

� An individual who is either a director in a companyand has invested in unlisted equity shares cannot usethis form.

Major Changes made in ITR-4 forAY 2019-20

� ITR 4 form for FY 2018-19 is not applicable to an individualwho is either a director of a company or has invested inunlisted equity shares.

� Under Part A, ‘Pensioners’ checkbox has been introducedunder the ‘Nature of employment’ section.

� Return filed under section has been segregated betweennormal filing and filed in response to notices.

� Deductions under salary will be bifurcated into standarddeduction, entertainment allowance and professional tax.

� 80G Deduction: Amount of Donation is bifurcated intocash and other mode.

� Separate Business details like Name of business, businesscode, description for section 44AD, 44ADA & 44AE.

� New fields under section 44AE has been introducedlike Registration No. of goods carriage, Whetherowned/leased/hired, Tonnage Capacity of goods carriage (inMT), No. of months for which goods carriage wasowned/leased/hired by assessee etc.

� Under GST details the turnover text has been replaced by“Annual value of outward supplies as per the GST returns filed”.

� ‘Deemed to be let out property’ option now available under‘Income from house property’.

� The taxpayers will be required to provide income wise detailedinformation under the ‘Income from other sources’.

� A separate column is introduced under ‘Income from othersources’ for deduction u/s 57(iia) – in case of family pensionincome.

� Section 80TTB column has been included for senior citizens.

Source of Information

Tentative Financial Statementsprepared or provided by assessee